Hot Topics:

Business

Electronics-makers try to lure consumers into "ecosystem" of the company's products

By Andy Vuong The Denver Post

Posted:
01/30/2012 01:00:00 AM MST

Updated:
01/30/2012 03:00:16 AM MST

Derek Rice calls the iPod the gateway product, the gadget that turned his into an Apple household. A few years after buying the portable music player, he dumped his Windows-based desktop for an Apple MacBook. Now he also owns an iPhone and iPad. "All of the products seem to talk to each other really well," said Rice, a Littleton resident. "The more seamless Apple makes it, the more interested I am in continuing with their products." It's the "ecosystem" — the buzz word coming out of this year's International Consumer Electronics Show.

Electronics-makers increasingly want consumers to "bundle" with them, similar to the way service providers such as Comcast and CenturyLink push their triple play of video, phone and broadband services. The goal is to increase stickiness and reduce the likelihood that consumers switch providers or brands.

Apple is ahead of the game, though others are quickly following suit.

At CES, TV-maker Vizio jumped into the PC business with ultrabook laptops and all-in-one desktops. Computer-maker Lenovo released its first Android-powered Smart TV. Pantech launched a new smartphone and tablet, and a deep discount is offered if both are purchased at the same time with a two-year AT&T contract.

The recent trend outside of Apple may have started last year when Samsung bundled its electronics products, offering a free tablet with the purchase of a big screen TV.

Advertisement

"They were making a push for consumers to not only buy their TVs and their phones and their tablets, but also to buy their Wi-Fi hotspot and their cameras and laptops," said Bryan Gonzalez, director of the Social and Digital Media Technology Labs at the University of Southern California. "They were pushing this idea that if you had everything Samsung in your life, it could work seamlessly with each other."

The ecosystem goes beyond hardware, and that's where Apple has a clear advantage. In addition to cranking out sleek phones and computers, the company develops the software that powers the devices, with iOS for mobile and Mac OS for desktops and laptops. And Apple last year launched iCloud, allowing consumers to store everything remotely for easy access on multiple devices.

Most other manufacturers rely on third-party software from the likes of Microsoft and Google.

That may soon change. Google has proposed to acquire Motorola, the maker of many top Android smartphones. Samsung is working with a number software startups to beef up its curated app store. At the CES, Microsoft showed off integration capabilities between Windows-powered smartphones and its Xbox gaming console.

"Companies are looking to do innovative new services rather than competing on the basis of raw price and raw hardware," said Bob Lambert, chief executive of the Digital Firm, which provides industry market analysis.

For the consumer, it means their bundle of electronic gear will work better together. They'll be able to control everything from a tablet rather than from an array of remotes. They can record a video on their phone and watch it almost instantly on their TV or computer.

For companies, the true moneymaker may be selling digital content, such as music, apps and TV shows on demand, said Lambert, a former senior vice president with the Walt Disney Co.

Again, Apple is on top with the iTunes store.

"It's not a good thing for us as consumers if iTunes gets too much market share and they become what Windows was 10 years ago," he said.

The advantage Samsung, Vizio and other TV-makers may have on Apple is that the TV is the anchor device in most households. Though more than 1 million Apple TV set-top boxes were sold last quarter, Apple has not created a revolutionary TV product like it has with music players and smartphones.

"The television is the thing that's going to stay in a consumer's home the longest, from five to seven years. Phones get swapped out every two years," Gonzalez said. "By having some sort of anchor in the household, either a Wi-Fi router or a television, something that will not change as much, you encourage that stickiness for that consumer to come back to those products."

In the Rice household, Sony dominates the living room, where there's a Sony TV, Blu-ray player and receiver. But with a growing library of TV shows, movies and pictures sitting in his collection of Apple products, the door is open for change.

"There's a lot invested there, so if Apple were to come up with a pretty cool TV product, I'll take a serious look," Rice said.

One-day event to run slide down University HillIt's not quite the alternative mode of transportation that Boulder's used to, but, for one day this summer, residents will be able to traverse several city blocks atop inflatable tubes.